Resumen:

I study the role played by uninsured idiosyncratic risk and liquidity
constraints in the propagation of aggregate fluctuations. To this purpose, I compare the aggregate fluctuations of two model economies that differ in their insurance technologies only. In oI study the role played by uninsured idiosyncratic risk and liquidity
constraints in the propagation of aggregate fluctuations. To this purpose, I compare the aggregate fluctuations of two model economies that differ in their insurance technologies only. In one of these model economies liquidity constrained households vary their holdings of a nominally denominated asset
in order to buffer an uninsured idiosyncratic shock to their individual production opportunities. In the other economy every idiosyncratic component
of risk can be costlessly insured. I find that the limited insurance technology
implies fluctuations in output that are 20% larger, fluctuations in hours relative to output that are 9% larger, fluctuations in consumption relative to output that are 18% smaller, and a correlation of hours and productivity that is 15% smaller than those that obtain under the full insurance technology.[+][-]